Rich NRIs may have to pay more tax if Miliband becomes PM

Updated: Wednesday, April 8, 2015, 23:01 [IST]

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London, Apr 8: Rich NRIs in the UK will have to shell out more tax if the opposition Labour party comes to power, as its primeministerial candidate Ed Miliband today said it will scrap the non-domicile policy, a move likely to affect affluent residents like steel tycoon Lakshmi N Mittal.

Miliband, who is in the running for Prime Minister in the May 7 general elections in the UK, announced that under a government led by him, the non-domicile tax status enjoyed by many - like Mittal - will be abolished.

"There are people who live here in Britain like you and me, work here in Britain like you and me, are permanently settled here in Britain, like you and me, were brought up here, but just aren't required to pay taxes like you and me," he said as part of an election campaign speech.

"The next Labour government will abolish the non-dom option," he added.

Mittal will be among thousands of rich British residents affected under tax changes to the non-domicile  usually abbreviated to 'non-dom' - status, which is a quirk of the UK tax system not shared by any other country.

It allows ultra-wealthy individuals to be born, raised and reside in the UK, but still pay far less tax than a typical UK citizen, all within the law.

Many wealthy Britons with interests overseas take advantage of the legal means of reducing their tax bill.

The UK Treasury says there are about 110,000 residents with non-dom status.

They include tycoons such as the London-based ArcelorMittal chief Mittal and Greek shipping magnates, and the vast majority work for banks, hedge funds and private equity firms.

Ironically, Mittal is seen as a prominent Labour party supporter in the past, having donated significant sums to its coffers under Tony Blair's prime ministership.

NRI industrialist Lord Swraj Paul, who had voluntarily given up his non-dom status in 2010, welcomed the latest announcement by Labour leader Miliband.

"I think we are moving on the right track. The policy needs to be fully clarified - either you are domiciled here or you are not," he told ITV news.